Aged care “free market” where a home care package deal masks a crisis
Seven years after Scott Morrison surprised everyone by announcing the Royal Commission into Aged Care Quality and Safety, media headlines are again describing an ‘Aged Care Crisis’. This is not surprising, given Labor’s “generational (my italics) aged care reforms” fail to address fundamental systemic issues.
These systemic issues began when the Howard government’s Aged Care Act 1997 encouraged an increase in private investment in the aged care sector. Private equity firms, new foreign investors, and superannuation and property real estate investment trusts entered the aged care ‘market place’.
Labor’s “Living Longer Living Better” 2012 reforms continued to treat aged care as a free market – describing older people as “consumers”. The 2016 Aged Care Roadmap called for “lighter regulation” and a “consumer driven and market-based system”.
Treating aged care as a free market led to the Royal Commission into Aged Care Quality and Safety because some providers prioritised profits over care.
The Royal Commission found the aged care system was based around “transactions” rather than care. However, the commissioners did not agree on the changes necessary to shift from a provider-focused system to one that places the rights of older people front and centre.
Across 148 recommendations, there were 43 points of disagreement between the two commissioners. While Pagone recommended fundamental systemic changes, Briggs did not. For example, Pagone recommended the creation of a new independent statutory agency — the Australian Aged Care Commission. In contrast, Briggs recommended the Department of Health added “and Aged Care” to its name.
Both Liberal and Labor governments accepted Briggs’ recommendations – thereby forgoing the opportunity for fundamental systemic changes to the aged care system.
After rejecting the recommendation to finance the aged care system through an aged care levy, the Labor government convened yet another taskforce in 2023. Most members of the Aged Care Taskforce were the usual suspects, ignoring Einstein’s adage “We cannot solve our problems with the same thinking we used when we created them”.
It was Aged Care Taskforce, not the Royal Commission, that recommended a funding model in which people should make a co-contribution to their care costs based on their ability to pay. In fact, co-payments are contrary to the recommendations of the Royal Commission that called for guaranteed access to aged care based on assessed need.
The new co-contribution funding model is primarily focussed on a medical not social model of care. Activities such as nursing care, wound management, physiotherapy, and medication assistance, remains fully funded by a home care package. In contrast, services supporting daily living and independence, such as domestic and gardening help, showering and lifestyle activities are subject to co-payments. The out-of-pocket costs for domestic and gardening services will range from 17.5 per cent for full pensioners to 80 per cent for self-funded retirees.
While exceptions will be made for people who satisfy hardship provisions, the process of making the application with Services Australia will be difficult for some older, vulnerable people.
Co-payments will undoubtedly undermine some basic rights for those least able to afford care. The cost of a shower, for example, will range from 5% for full pensioners to 50% for self-funded retirees. If an older person cannot afford the co-payment for a shower, they may need to skip it. This not only has implications for a person’s hygiene but also their dignity.
Much has been made of Labor’s new aged care act that will be introduced later this year. The new aged care act has been promoted as a rights-based framework for the delivery of aged care. However, Stephen Duckett described the new aged care act as “rights washing”. According to Duckett: “(The) high sounding rhetoric is simply there to placate consumers and advocates, allowing providers to continue on their way unimpeded.”
In her recent damning report on the progress of the recommendations of the royal commission, the aged care inspector general, Natalie Siegel-Brown, described charging fees for services that support social and community engagement as “inconsistent with the [new aged care] act’s approach to high quality care, particularly the importance of individuals participating in meaningful and respectful activities”.
The new aged care act does not confer an entitlement to receive care. A person is entitled only to assessment – not to receive the care they are assessed as needing. Again, this is contrary to the recommendations of the Royal Commission.
Why has the Labor government failed to deliver a new aged care act that genuinely enshrines the rights of older people who use aged care services – either residential or in-home care? Kathy Eagar offers a possible explanation: “The current government appears captured by the aged care sector itself and by a small group of Canberra public servants.”
After a royal commission that cost around $92 million, and a Labor government that campaigned in 2022 on implementing aged care reforms, many of us hoped that stories about an aged care crisis were behind us. Sadly, that is not to be.
First published in Michael West Media 9 September 2025